KEY POINTS:
A young average-wage earner willing to take a risk stands to have more than $600,000 in the bank at retirement age if he or she joins the KiwiSaver scheme that starts tomorrow.
A Weekend Herald survey of the 21 providers offering KiwiSaver schemes by Thursday found that savers paying 4 per cent of the average wage into a risky "growth fund" would have between $634,000 and $1.4 million in the fund after 40 years.
Two more general providers, Asteron Insurance and sharebroker ABN Amro Craigs, were registered by the Government Actuary yesterday.
Aon, ASB and Mercer have registered two schemes each, and almost all the 26 general schemes have at least three levels of risk in their menus, giving savers well over 100 options.
Thousands of potential savers had not reached stage one in their decision-making yesterday, as employers still did not have enough information packs from Inland Revenue to inform all their workers.
But financial advisers urged people not to panic.
The stock exchange's head of products, Geoff Brown, said the effective deadline for choosing a scheme was October 1, not tomorrow.
"People are feeling pushed into making a decision before the end of this month," he said. "But while employees wishing to opt into KiwiSaver should do from July 1, they have three months to make a decision on their KiwiSaver fund provider.
During this time, their money would stay with the Inland Revenue Department.
"So they should not feel pushed into making that decision until they've taken time to do their own research and decide what's best for them."
David Yates of Takapuna company Advice Financial, which is running KiwiSaver seminars for the Retirement Commission, advised people to join one of the six default KiwiSaver schemes initially, and watch the performance of the other providers.
The default schemes have been chosen by the Government as the safest on offer, and must hold at least 80 per cent of their assets in the safest categories - cash and bonds.
Anyone who enrols in KiwiSaver will be randomly allocated to one of them unless he or she chooses another scheme.
The Herald survey gave providers a standard scenario - pre-tax returns of 4 per cent for default funds, 4.5 per cent for conservative funds with three-quarters of their assets in cash and bonds, 7.5 per cent for balanced funds with half their assets in cash and bonds and half in shares and property, and 10 per cent for growth funds with three-quarters in shares and property.
The scenario assumed zero inflation, so the results after 40 years are in the value of today's dollars.
The amount of KiwiSaver cash an average wage-earner would have after 40 years was from $269,000 to $310,000 for default funds, $269,000 to $415,000 for conservative funds, $421,000 to $555,000 for balanced funds and $635,000 to $873,000 for growth funds.
But three providers said the scenario was unrealistic because it assumed the funds would pay the new company tax rate of 30 per cent. There is no tax on most capital gains.
One provider, Fisher Funds Management, said that under the way it would operate its fund in relationship to tax, the average wage-earner would have $1,407,000 after 40 years.
